Nigeria Gas Company Limited (NGC)

ADDRESS
No. 1 Odin Road, Ekpan,
P.M.B 1288. Warri
Delta State,
Nigeria

COMPANY PROFILE

The Nigeria Gas Company Limited (NGC) is a wholly owned subsidiary of the Nigeria National Petroleum Corporation (NNPC). It was incorporated as a limited liability company on 25^th June 1981 with an authorized share capital of N5, 000,000. The company commenced operations as a corporate body in 1988 following the establishment of additional subsidiary companies by the NNPC in response to the changing conditions of the national economic environment.

Basically, NGC is responsible for the development of an efficient gas industry that would fully serve the domestic energy needs and provide industrial feedstock requirements through a national integrated pipelines network. The company is also poised to establish Nigeria’s presence in the international natural gas market, particularly the West African sub-region through the export of gas and its derivatives.

Its role as the gas arm of NNPC is:

• Transmission and distribution of natural gas from producing fields to customers
• Marketing of natural gas and its derivatives nationally and within the ECOWAS sub region
• Development of a national, integrated pipeline transmission network.
• Development and recommendation of policies on gas utilization and pricing to government.

MAIN PROCESSING UNITS

NGC’s main transmission system currently consists of three (3) major pipelines namely;

Escravos- Lagos trunk pipeline (ELP) for supplies to the Western parts of the country and to ECOWAS.

Oben- Ajaokuta pipeline, which is the backbone for supplies to the North

Alakiri-Obigbo- Ikot Abasi for the Eastern trunk.

NGC’s installed pipelines have a total system capacity of over 2Bscf/d, with installed costs of over US$937.47 million.

FACILITIES

The man facilities of the NGC are:

• 14 Compressor Stations
• 22 Metering Facilities
• 1,158km of Pipelines
• 2.5Billon scf/d total installed capacity
• $900million invested in assets

UTILITY UNITS

NGC currently has 14-point -of- sale customers, which are regarded as being in 3 business sectors, which are characterized by the price the customer pay for their gas, viz:

Sector                               Customers                                          Gas price, N/mscf

Commercial             Aba/Lagos Industries    194.30- 258.80

WAPCO Ewekoro & Shagamu

PZ, Lagos

 

Parastatal               ASCL Ajaokuta  11.31

DSCL Aladja

NEPA Afam, DeltaIV, Egbin & Sapele

 

q-Parastatal            ALSCON Ikot Abasi

NAFCON Onne   11.31 -41.00

WRPC Warri

EQUITY STRUCTURE

The Company has an authorized share capital of N5, 000,000 (Five million Naira) that is divided into five million ordinary shares of One Naira each. The issued and paid up capital is N3.00 (Three Naira) consisting of three ordinary shares of N1.00 (One Naira) each.

PLANNED MODE OF privatisation

Detailed divestiture plans await the completion of a comprehensive master plan on gas being conducted by the World bank, and may involve some measure of unbundling. However in line with the on-going privatisation programme, Government will divest at least 51% of its shareholding to a core investor or a consortium of foreign and/ or domestic investor while the remaining shares are to be sold to the Nigerian Public, out of which 10% would be sold to employees of the company.

SECTOR DATA

The Federal Republic of Nigeria is one of the world’s major oil & gas producers. Currently, the country’s oil & gas reserves are conservatively estimated at 26 billion barrels and 157 trillion cubic feet, respectively. As has been established, Nigeria is blessed with abundant reserves of natural gas. Prospects for the growth of the GAS INDUSTRY are enormous when viewed from the various industrial and commercial consumers that need to be served and the potential local market available for chemicals derivable from natural gas, which are currently imported. The Federal Government through NNPC and its subsidiary, NGC is committed to promoting and providing favourable economic environment to allow private companies (Local and Foreign) to participate in the Gas Industry.

GAS POLICY

Two distinctive features  characterize the global gas industry namely:

1. The business requires a substantial amount of infrastructure, most of which requires large, up-front capital investments, and
2. There is intense competition for companies’ investment dollar as gas opportunities around the world exceed capital reserves.

The importance of gas policy on development and utilization of Gas cannot be overstated. Currently there is no approved national policy in existence. The policy will address the following;

• Inter-fuel pricing and substitution
• Energy security and flexibility
• Impact on economic growth
• Institutional infrastructure
• Efficient market function

REGULATION

There will be need for an effective structural regulatory regime to balance the interests of consumers, transporters, distributors and suppliers of gas.

FISCAL INCENTIVES

For Nigeria to successfully eliminate gas flaring, it will be necessary to provide incentives that support both the expansion of the domestic gas market as well as export projects.

MARKETING SCOPE

The development of a gas industry takes time, with long-term commitment and planning. The three segments of the gas chain (Production, Transmission, and distribution) must all operate efficiently for widespread use of gas in the country. The gas transmission phase will be the critical determinant of gas development and commercialisation success.

NGC’s position as the only major Transmission Company for now, places it in a strategic position to contribute to the development of the gas industry. Recent investments by NNPC through NGC in gas supply schemes have brought natural gas within the reach of a significant number of industries in the Southern parts of the country, but the long-term objective of NGC is to establish an integrated national network of gas supply pipelines.

NGC intends to expand its business to meet the needs of its customers, particularly in the Eastern and Northern parts of the Country. To this end, NGC intends to make additional capital investment to expand its business by extending its transmission pipeline systems. NGC was and is still shouldered with responsibility for an orderly development of network of domestic gas infrastructures.  In playing this role, additional systems have been constructed since 1985, namely supplies to: NEPA, Afam; IGIl & other industries at Aba, NAFCON Onne, The Escravos-Lagos-pipeline (ELP), and the Alakiri-Obigbo-Ikot Abasi line to ALSCON

ENTERPRISE DATA

NGC is a profit oriented gas company, committed to extending gas to all areas of the nation and West Africa sub-region, to achieve a gas utilization culture that makes the fuel and feedstock of first choice. Presently, NGC supplies the bulk of the domestic demand for gas, which is practically all by their industrial customers, with an insignificant number of residential customers. Gas supplies for power generation accounts for over 70% of NGC’s gas throughput. The expected industrial development as the Nigeria Market opens up presents unique market for the NGC.

FIVE-YEAR FINANCIAL SUMMARY: 1998-2002

NGC’s financial summary would have been much better, but for the excessive debt owed it by other public enterprises

	1998	1999	2000	2001	2002
Turnover	2,831,649	3,992,956	3,306,207	4,043,088	4,778,297
Profit before taxation	370,207	1,425,088	110,076	299,418	454,152
Taxation	187,000	220,000	20,000	50,000	84,743
Profit after taxation	370,207	1,425,088	90,076	249,418	369,409
Working Capital ratio	1.24	1.41	1.35	1.76	2.14

PROSPECTS

Natural gas has become an important business in its own right. It is estimated to outgrow oil as a reserve source in the next few years. Its increased development and utilization for domestic market most especially in power generation, industrial and agricultural sectors will help enhance development of the Nigeria economy.

The future development of the gas industry and the extent, to which NGC is able to achieve its objectives, would however, depend on ready markets for gas (either in new projects, or by existing industries substituting gas for other sources of energy), and availability of gas at an economic and competitive price to encourage gas development and production. The gas transmission company must be allowed to charge an appropriate gas price to all consumers, a price that captures not only all costs, but also includes a return on capital investment, and allows for gas system expansions.